Credit rating agency, India Ratings in its latest report has said that despite the cash shortage hurting some sectors significantly in the third quarter, the impact of demonetisation on the credit profile of large corporates (revenue over Rs 250 crore) remained neutral, with no significant changes in their ratings expected due to the notes ban move. It pointed that large corporates have sufficient liquidity buffers to meet debt servicing obligations.
The report noted that the impact has been varied, depending on the extent and nature of cash usage within an industry. Further, it said that the immediate impact of note-ban on revenues of large firms in third quarter of 2016-17 ranges from nil for the export-oriented sectors like Information Technology (IT)/Information Technology enabled services (ITeS), to a significant impact on auto, real estate, gems and jewellery, with a gradual recovery expected as cash availability improves in the fourth quarter (January-March).
The report stated that during demonetisation a significant fall was witnessed in sales of a couple of sectors where the nature of cash usage is often considered dubious like real estate, gems and jewellery. However, it said that organised players and large corporates in such sectors will benefit in the long-run. It added that the sectors which are ancillary to the impacted sectors like auto components, cement, steel or other metals will also see the ripple effects of demonetisation.